Spam law could bite smaller businesses

By Michael Battersby, Intellectual Property Law Specialist

© Battersby and Co 2006: Reproduced with permission

The Commerce Select Committee will report back to Parliament in June on submissions on the Unsolicited Electronic Messages Bill, which is expected to become law in August.

While there is no doubt we urgently need anti-spam legislation, the downside for smaller businesses may well be uncertainty and higher marketing costs.

The government has acknowledged that businesses most likely to be caught by this legislation are SMEs. Larger businesses tend to follow e-marketing best practice already and should suffer little regulatory impact.

Smaller ones also need to market themselves but can’t always afford professional marketing and legal advice.

[The Marketing Coach says: If you're worried your email newsletter might be caught by anti-spam legislation, then you're not doing it right. - see "Is Your Newsletter Spam?"]

The government-estimated cost of compliance by SMEs is $1,000 - $2,000 covering:

c Changing address lists to “opt-in” and ensuring emails are appropriate to the business relationship

c Ensuring all marketing/promotional messages contain correct sender information and how to unsubscribe

c Setting up systems to update electronic addresses held for marketing purposes and separating commercial and promotional materials.

The new rules will come into force only 4 months after enactment, and many businesses may not have sufficient lead-time to comply. There are also a number of areas of uncertainty in the legislation.

As certain types of messages are deemed not to be spam it seems the government is less concerned with regulating the number of people to whom a message is sent than the content.

The Bill distinguishes between electronic messages which are primarily commercial (requiring “opt-in”) and those which are purely promotional (requiring “opt-out”). This distinction has been criticised as meaningless, encouraging businesses to claim messages are promoting the organisation as a whole rather than products or services.

Another contentious issue is consent, which can be express, inferred or deemed. Express consent occurs where a person gives permission for commercial marketing emails to be sent. Inferred consent can be implied by conduct or the business relationship, eg. a supplier/customer relationship. Where exactly the line will be drawn on inferred consent is not specified in the Bill.

Consent is deemed where the address has been conspicuously published in a business or official capacity and the message is relevant to the recipient in that capacity.

However, if the address has a statement that the person does not wish to receive unsolicited messages then that request must be respected. This clause has been criticised as encouraging, or giving permission for, address harvesting of “conspicuous” addresses.

This approach is more lenient than the Marketing Association standards for email marketing and may promote harvesting where a person has no control over the publication of their email address (for example in a professional directory).

Under the Australian Spam Act 2003, consent is addressed in detail in a separate schedule. The basic definition allows for express or inferred consent only, not deemed.

The Bill prohibits the supply and use of address harvesting software or lists generated by this type of software with exceptions. Section 15 deals with supply or offers to supply address harvesting software.

It is an offence to supply/offer to supply address harvesting software, the right to use address harvesting software or a harvested list/the right to use a harvested list. However, if the supplier has no reason to suspect that the software/list would be used for the purposes of spam, or that the recipient was associated with New Zealand then the rule does not apply.

Concerns were raised about this section. Some submitters felt there was no need to prohibit the supply of the software/lists as there are possible legitimate uses and only use for the purposes of spam should be an offence. The fear was that suppliers would add a tick box for purchasers that says “I am not affiliated with New Zealand and do not intend to use this software in New Zealand” to escape liability if the product were subsequently used in New Zealand.

The Australian government has recently undertaken a review of the Spam Act 2003. It has been suggested we wait until the results are published before finalising our legislation. This would enable us to benefit from the ‘settling down period’ of the Australian version and learn from their experience.

It is notable that in the first sixteen months of the Australian spam law more than 200 businesses were required to amend their practices by the Australian Communications and Media Authority.

About the author:

Michael Battersby is an Auckland-born lawyer with a background in company and commercial law and business, both in New Zealand and overseas.

Hehas an MComLaw (Hons) from Auckland University in intellectual property, information technology and international trade law. He is a member of IPSANZ (Intellectual Property Society of Australia and New Zealand) and has been Vice-President of the New Zealand Technology Law Society since 2002.

Further articles on email marketing are available on the Battersby & Co website.